The following is a guest article from Jim McKinley.
Baby Boomers - the generation of adults born between 1946 and 1964 - are known for their frugality. Raised by their Greatest Generation parents, they grew up knowing that another economic depression could be just around the corner. However, growing up in 20th century, America provided unprecedented social security and opportunities for Boomers. Their frugality and financial fortunes has led most Baby Boomers to a secure retirement in their later years.
In fact, according to the "Generations Ahead Study" conducted by life insurance company Allianz, the majority of retirees polled said they felt financially prepared as they spent their adult life saving rather than spending. For some of these Baby Boomers, the transition from being a saver into being a spender in retirement can be a difficult one to make. Their anxiety over spending their retirement funds is often intensified over the social trend of people living longer, which means a fixed income has to be stretched over more years.
But retirement is supposed to be the best time of a person's life. Spending your Golden Years sweating over money when you've worked so hard to save is actually counterproductive. The United States' economy is propelled by spending. Relaxing a bit and having some fun with your money isn't just good for retirees -- it's good for all the people of younger generations who are still in the workforce trying to get where you are today eventually.
Retirement Balance: Fun On A Fixed Income
As long as your fixed expenses are covered, you should feel fine about spending a little more on yourself when you hit retirement. Fixed expenses for retirees often include things like insurance, utilities, and mortgage payments if you still have them. These costs should cover about 50 percent of your budget and should be paid with a reliable income like your Social Security or pension payouts. If you can get them down, all the better. However, don't make the mistake of doing something like downsizing when the costs outweigh the benefits.
And there's no reason to abandon all of your frugal ways. Saving money on little things you do from day to day can mean you have more to blow when you go on vacation, buy gifts for loved ones, or want to treat yourself. Find ways to save cash that make it easy. For instance, always ask for the senior discount wherever you go. Most stores and restaurants offer at least 10 percent off your total purchase - just remember to tip your waiter based on the original total.
Other Ways Retirees Can Save Money
- Adopting a dog provides seniors with constant companionship, unconditional love, and even a bit of gentle daily exercise. If you are thinking of bringing a precious pup into your life, adopt -- don’t shop! Not only will you save a life, you will also save hundreds, even thousands, compared to buying a purebred.
- Start looking for ways to cut your transportation expenses. If you drive a lot, a hybrid car can save you thousands of dollars a year on gas. Depending on where you live, you may also save money on your monthly car insurance premiums if you invest in a hybrid.
- With all your free time in retirement, you can do the research necessary to find new health care coverage that's more affordable. If you use private insurance, let them know you are shopping around. If they don't offer you a discount, a competitor will!
Baby Boomers grew up frugal, which means most of them are financially prepared for retirement. Of course, turning the switch from saver to spender can be difficult. However, as long as your fixed expenses are covered, there's no reason to avoid spending. In fact, the economy relies on retirees putting that money back into businesses. If you can't quite shake your frugal ways, that's okay. Find easy ways to save money on little things like transportation and you can have more cash to buy the things and experiences you want.